Cazoo’s controversial $8bn float this week
25 August 2021
Cazoo is now being described as an ‘octo-unicorn’ with an $8bn valuation. When it floats on Friday, founder Alex Chesterman’s stake will be worth $2bn. 60 employees will be paper millionaires and 2,250 staff will receive windfalls.
Traditional investors warn Cazoo is a bubble waiting to burst, “a company valued so highly that it can never live up to its promises”.
Cazoo bulls say any comparisons with traditional retailers is pointless as they will not be able to achieve the global scale of Cazoo. US alternative Carvana is valued at $60bn, while thriving UK retailer Vertu is valued at £188m.
Sanjay Vidyarthi, an analyst at the broker Liberum, is sceptical: “I can see how people make a read-across from Carvana and extrapolate this big valuation — but fundamentally, is Cazoo really worth more than the entire UK motor retail sector? It doesn’t feel right.”
The fact Cazoo is going public via a Spac is also controversial. The company has experienced redemptions of 70%, from sponsors seeking returns pre-float; this cut potential cash from sponsors from $805m to £241m.All eyes are now on Friday’s float – and whether Cazoo will be a Deliveroo-style flop or defy the sceptics with a share price rise.
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